Grid trading is one of the most popular strategies in automated trading, thanks to its multifaceted approach and higher chances of profit. It is particularly suitable for cryptocurrency trading, where selling and buying digital assets in any market trend proves helpful for traders.
So, if you’re new to crypto grid trading or have no fruitful experience yet in this trading strategy, this article offers you some tips to help you get started and make the most out of it.
- Invest in Reliable Grid Trading Bot
The first thing you need for an effective crypto grid trading strategy is a reliable grid bot. Grid trading can’t be performed manually. Since the trading method uses different price ranges and quick trading, it can only be executed by a good bot service.
You can find a variety of crypto trading bots that allow you to execute the grid trading strategy in the best way possible. Most of these bots are affordable with user-friendly features. And others can be expensive due to their advanced features.
You may need to find a bot that gets the perfect balance between these factors from the get-go. It should have stable and reliable software built with an array of necessary trading options. In addition, it should also help you launch several grids with various cryptos.
And more so, your bot solution should support your primary crypto exchange and other popular crypto platforms. Still, some crypto exchanges have built-in bots like Pionex to streamline your trading process. But before signing up with these exchanges, make sure to check their credibility and reliability. Learn more about them on review sites and blog posts. If you’re wondering if Pionex is legit, check its comprehensive review.
- Widen Your Price Range
Most grid bot solutions make it easy to set pricing factors. Grid trading allows you to set a price range and use the grid bot with your preferences.
As the grid bots trade in both market directions, your pricing limits may define the threshold of when it should stop. If the price limit is set in a narrower range, it may limit your bot. While it does provide a more careful strategy, it restricts the opportunities for bigger profits.
Thus, it would be best to set a wider price range for your strategy. It can help free you from checking it now and then, and increase the opportunity to make more trades and the chances of generating more profits.
That said, you may need to tread carefully since it also increases the risk. Consider backtesting and see how this strategy might play out with the past market trends.
- Set A Profit Goal
Consider setting a profit range for each grid trading that you have. While any profit is considered a good thing, there’s always a way to improve your trading and yield better results.
So, it’s vital to observe the profitability of each grid consistently. For most new traders, this could be the most challenging factor to handle when trying crypto grid trading. You may try to follow the experience and values recorded by other grid traders to determine what profit is good enough. It may also provide you with a guideline on what profit range is acceptable for each grid.
In some experiences, a profit range of less than 0.3% may not do you any good and could only be used for paying trading fees. However, a profit range of over 1% can make your grid not make enough trades.
- Take Advantage of Sideways Markets
Sideways market refers to when a particular asset or security trade continues to trade within a specific price range without any significant uptrend or downtrends. In other words, its price doesn’t break its all-time low or high-value record.
Thus, sideways marketing could make an excellent condition to do grid trading with your bot. Since the crypto market doesn’t offer higher risks on either scale, it can provide a favorable trend in obtaining profits.
To look for a sideways market, you may need to observe the market conditions against your primary exchange. You can also look for indications of these markets and recommendations from different crypto forums.
The Bottom Line
Grid trading can be an overwhelming or even a challenging trading strategy to adopt at first. However, once you learn to get the hang of it, it may not be as complicated to implement this trading strategy on your own. By following the above tips and testing, you can master this form of trading and take your profits to the next level.